STOCK WATCH

Kilburn Engineering Ltd. (Code: 522101) (Rs.46.70) belonging to the Williamson Magor Group operates in areas of process design, engineering, manufacturing, installation and commissioning of turnkey plants and systems catering to industries such as petrochemicals, chemicals fertilisers, refineries, oil & gas and food processing. It has already been discharged from the purview of SICA / BIFR as its networth has turned positive. For the year ending 31st March 2006, it may report sales of Rs.50 cr. with net profit of Rs.4.50 cr. i.e. EPS of Rs.3 on its current equity of Rs.13.50 cr. But the company is expected to make a smart turnaround from FY08 on the back of higher volumes as well as better margins. Currently, it has a very healthy order book position to the tune of Rs.100 cr. Hence for FY08, it can clock a turnover of Rs.80 cr. with profit of Rs.8.25 cr., which will lead to an EPS of Rs.6. Besides, the company is in the of relocating its manufacturing plant to a bigger premises and may sell its land admeasuring 8.42 acres in Bhandup, which may fetch around Rs.100 cr. After hitting a high of Rs.92, the scrip has tumbled down sharply to Rs.40 level. Investors can safely buy it at current levels with a price target of Rs.75 in the medium-term.

The share price of Rama Paper Mills Ltd. (Code: 500357) (Rs.35) is trading in the same price range over the past two years inspite of the sharp improvement in its fundamentals. It has already enhanced its capacity to 44500 TPA by installing some balancing equipment and is putting up an additional line to produce tissue and post paper with a capacity of 18380 TPA. Further, it has plans to augment its production capacity to 79500 TPA and is in the process of installing 6 MW power plant for captive consumption to reduce its power cost substantially. Although its December 2006 numbers were not great, still it is expected to report net sales of Rs.90 cr. with net profit of Rs.7 cr. i.e. EPS of Rs.9 on equity of Rs.7.60 cr. for FY07. During FY07, it raised Rs.8.75 cr. through preferential allotment of 25 lakh equity shares at Rs.35 per share and the promoters are infusing Rs.7.50 cr. by way of preferential allotment of 20.83 lakh equity shares at Rs.36 per share. With this, the promoter holding will shoot upto 41% from 25% currently. For FY08, it may register sales of Rs.110 cr. with PAT of Rs.9.50 cr. i.e. EPS of Rs.10 on its diluted equity of Rs.9.70 cr. At the current market cap of Rs.25 cr., it’s a screaming buy.

IMP Powers Ltd. (Code: 517571) (Rs.94) manufactures the entire range of power & distribution transformers, electrical & digital measuring instruments, testing equipments etc. It produces HV & EHV power transformers ranging from 10 KVA upto 150 MVA and has a total installed capacity of 3600 MVA. It is the only transformer company in the zero sales tax zone enjoying 15 years (till 2012) sales tax holiday
for its Silvassa unit. Recently, it manufactured and dispatched a 100 MVA, 230 KV class transformers worth Rs.4 cr. to Rajasthan Rajya Vidyut Nigam, which is an achievement by itself. Last year, it made preferential allotment of 9,15,000 equity shares and 5,10,000 equity warrants at Rs.85 per shares. For the year ending 30th June 2007, it is expected to report a topline of Rs.100 cr. and bottomline of Rs.8.25 cr. i.e. EPS of Rs.14 on its current equity of Rs.5.90 cr. Ironically, despite the strong demand for its product, its capacity utilization is barely 50%, which it intends to push around 80% in FY08. Hence for FY08, it is estimated to register sales of Rs.140 cr. with net profit of Rs.12.50 cr. i.e. EPS of Rs.19 on its diluted equity of Rs.6.70 cr. Available at a P/E ratio of less than 5, it is a very good buy.

Ahlcon Parenterals (India) Ltd. (Code: 524448) (Rs.54) is engaged in manufacture of life saving intravenous fluids including Dextrose, Saline, Electrolytes, Amino Acids, Fat Emulsion, Blood Substitutes, Small Volume Injectables, Eye Drops, medical disposals etc. Encouraged by the overwhelming success of its diversification into ophthalmic products, it has added more value-added ophthalmic products and is expanding its existing range of Infusions and Anti- microbial solutions. Further, it is in the midst of setting up a new project to almost double its production capacities, which will be operational by the second half of calendar year 2007. It may end FY07 with a total revenue of around Rs.50 cr. and profit of Rs.8.50 cr., which translates into an EPS of Rs.12 on its equity of Rs.7.20 cr. Importantly, the company has established a strong alliance with large local players in several key global markets and was been able to efficiently hedge the risk posed by a domestic market. Although the full impact of its capacity expansion will be felt in FY09, for FY08 it may report sales of Rs.60 cr. with net profit of Rs.10.50 cr. i.e. an EPS of Rs.15. Buy for a target of Rs.75 in 6-9 months.